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Mumbai: India's oldest foreign bank HSBC ruled out job cuts in India as part of its global recast, saying the country is a strategic market and one of the key profit centres and that it is in fact finding it difficult to offset the high attrition rates. "There will be a re-allocation of resources (as part of the 30,000 job cuts announced globally yesterday), but it's not going to be a cut heads. I hate the word cut heads. What we are trying to do is to eliminate bureaucracies at the back-end," HSBC India Chief Executive Stuart A Davis told reporters after announcing the first half results.
HSBC India, the fully-owned subsidiary of the largest European bank, reported a 33 percent rise in pre-tax profit to USD 451 million from the country, making this unit the sixth most profitable regional for the British lender.
"As far as India is concerned, I won't be overly concerned. The important thing is that both India and China are classified as strategic markets. So we will continue to feel for India and China.
"But generally speaking, we will eliminate as much bureaucracies at the back end as possible by streamlining operations and our IT systems. But we will continue to grow at the front-line," Davis said.
He was responding to a question on whether the nearly 10 percent job cuts announced by the global management yesterday would apply to the country.
Even after reporting a surprise 5 percent rise in first-half pretax profit of USD 11.5 billion yesterday, HSBC, which is the largest bank in Europe, had said it would shed 30,000 jobs as it retreats from countries where it is struggling to compete, Chief Executive Stuart Gulliver told reporters.
The bank had also said it had already cut 5,000 jobs following restructuring of operations in Latin America, the US, Britain, France and the Middle East and that it would cut another 25,000 between now and 2013.
HSBC had said on Sunday it would sell 195 US branches to First Niagara Financial for about USD 1 billion in cash, and close another 13 of the 470 sites it had. HSBC also intends to sell its US credit card portfolio, which has over USD 30 billion in assets to free up capital. The bank now aims to shut or sell retail operations in a further 20 countries.
"I think India already has a very high attrition rate. We are hard-pressed to even catch up on the replacements. There is a war for talent out there, but as I said, there will be reallocation of resources," Davis said.
"All countries in the APAC will follow the same principle as the rest of the world, but I think as far as India is concerned, being classified as a strategic market, the treatment will be different," Davis said.
Davis further clarified that reallocation of resources means that if there are too much of bureaucracies at the back-end, what we need to do is to streamline the back-end and use the resources in the front end.
He also hinted at more hiring if the economy economy continues to grow the way it is. "If GDP is going to grow at 7.5 percent, I think India is probably to be at that range also, then I have to say the head-count will probably go up. But I cannot guarantee that every single part of India operations is going to grow," Davis concluded.
"All countries in the APAC will follow the same principle as the rest of the world, but I think as far as India is concerned, being classified as a strategic market, the treatment will be different," Davis said.
He clarified that reallocation of resources means that if there are too much of bureaucracies at the back-end, what we need to do is to streamline the back end and use the resources in the front end.
Davis also hinted at more hiring if the economy continues to grow. If GDP is going to grow at 7.5 percent, I think India is probably to be at that range also, then I have to say the head-count will probably go up. But I cannot guarantee that every single part of India operations is going to grow," Davis concluded.
However, it can be noted that mid-July, the bank had announced some redeployment of its loan recovery staff, which would involve around 150 people getting relocated elsewhere in the bank or those failing in that effort losing the job.
"As part of our revamp process, we did in fact ask the employees in our loan recovery section to find new jobs within the bank," an HSBC India spokesperson had said on July 18.
Last month, another British bank Barclays had also announced merger of its client relationship teams in Barclays Corporate and Barclays Capital, which would result in a job loss of around 25 people.
Source: Financial Express
